Rumours of cash crunch and poor sales hit shares in Jessops

Shares in photographic chain Jessops tumbled to new lows yesterday as rumours swirled that the 70-year old business was close to collapse.

The shares, trading at 150p at the beginning of the year, dropped to 8.25p, before recovering slightly to finish down 2p at 11.5p. At that level the chain, with more than 300 outlets, is valued at £11m - or little more than one week's sales.

The damage was done by rumours, including suggestions that the group was facing a fresh downturn in sales, had a new problem with rental agreements and had breached new banking covenants.

However a spokeswoman categorically denied that the company faced "any issues with covenants" and put the price fall down to "a jittery market".

She added: "Jessops is a publicly listed company and if there was anything to say we would be saying it".

Jessops has been hit by falling camera prices, tough competition from supermarkets and online retailers and a decline in the market for point-and-shoot compact cameras, memory cards and camcorders.

The company issued three profits warnings in three months earlier this year and crashed to an £8m first half loss, compared to a £5m profit a year earlier. After one-off restructuring costs the total loss before tax was £25m.

In June the company said like-for-like sales were down 13% as wary suppliers had refused to provide stocks of top-selling cameras. But the company unveiled a £60m refinancing package with HSBC that it said would reassure suppliers and provide an 18-month breathing space. The turnaround plan includes closing more than 80 stores. The group is due to issue a trading update at the end of September.